France and Italy seek to boost EU influence with ‘friendship treaty’

France and Italy seek to boost EU influence with ‘friendship treaty’

Macron and Draghi want closer ties in Europe but face test over cross-border defence deal

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France and Italy were at such odds two years ago that Paris recalled its ambassador and a spat between leaders descended into name-calling. But a Franco-Italian “friendship treaty” that President Emmanuel Macron will sign in Rome this week shows how the mood has changed.

Meant to spur closer collaboration on everything from foreign policy to defence and culture, the 60-page Quirinale Treaty mirrors a Franco-German deal from 1963. The idea was discussed in 2017 by Macron and former Italian prime minister Paolo Gentiloni but was sunk the following year by Italy’s coalition of Five Star and the nationalist League, which clashed badly with Paris over the matter of EU migration.

Now the project has been revived under Macron and Mario Draghi, Italy’s prime minister. With the former European Central Bank president at the helm in Rome, Italy’s nationalist-populist impulses have been so tamed that even the League favours the treaty.

“Our interest right now is to restart talks with France,” Lorenzo Fontana, the League lawmaker who is responsible for the party’s foreign policy, told Italian media.

Politically, the Draghi government wants to use a better relationship with Paris to play a more active role at a European level — particularly at a time when Germany is expected to be focused more on domestic politics as a new government takes the reins from Chancellor Angela Merkel.

There are important upsides from France, too, from a stronger relationship. Strengthening ties will help Macron bolster the moderate, western European core of the EU and gain leverage against populists at home while securing an important ally to support him during the French presidency of the EU from the start of 2022.

The bridge between Rome and Paris could also help to negotiate a post-pandemic reform of the EU’s fiscal rules. The Stability and Growth Pact aims to limit government deficits and debt and is at present suspended because of the pandemic. A battle may loom over reform with so-called frugal countries such as Austria, Denmark, Finland and the Netherlands.

Even with Macron and Draghi in charge, however, it might not be all smooth sailing between the two countries — particularly on the business front, frequently a source of friction between competing French and Italian industries.

Discussions over the possible sale of an Italian weapons maker owned by state-controlled defence group Leonardo to a French rival could prove one early test. People close to the deal talks had been expecting the sale to be discussed during the French visit, but Italian doubts mean a decision could take a lot longer to hash out.

KMW+Nexter, a Franco-German defence joint venture, has made a €650m non-binding offer to buy Leonardo’s defence systems division, according to several people close to the talks. The division includes two businesses, formerly known as OTO Melara and Wass, that are leading manufacturers of naval cannons, tank turrets and torpedoes. The offer is €200m higher than that of Italy’s state-controlled shipbuilder Fincantieri.

But a backlash has begun, with the Five Star Movement, the senior member of Draghi’s coalition government, saying it opposes “the sell-off of Italian strategic assets to foreign investors”. The Democratic party, through labour minister Andrea Orlando, and unions have also criticised the idea of a sale.

At the weekend, Orlando, who is from the Ligurian city of La Spezia where OTO Melara is headquartered, said it was not a matter of “protectionism [but] it is quite obvious that financing foreign groups’ growth with national funds isn’t a clever strategy”.

“I spoke to [defence minister Lorenzo Guerini] and I think he is very clear on this,” he added.

Guerini has been more cautious in public statements and several officials in Rome say a solution is not straightforward because it is in Italy’s interest to be part of a Franco-German project to build the so-called European Main Battle Tank.

Supporters of a deal argue that it would help Italy’s defence capability by slashing production costs and be a tangible sign of increased European co-operation in the defence sector. Critics say Italy would, in effect, help France get rid of an important competitor in the arms manufacturing space while also putting Italian jobs at risk.

Wariness between French and Italian businesses has led to protracted takeover battles — as well as some ill-feeling — in the past. “French industrial groups have bought up a lot of Italian businesses,” said Philippe Moreau Defarges, a former diplomat and a senior fellow at the French Institute of International Relations think-tank.

In luxury goods, in particular, French businessmen such as Bernard Arnault and François Pinault have swept up emblematic Italian brands, adding the likes of Loro Piana, Bulgari and Gucci to their empires.

Italians have also flagged concerns over the merger in carmaking between FCA and PSA of France to form Stellantis. Paris, unlike Rome, owns a minority stake in the combined group which, they think, will help it better defend French production plants and jobs.

Silvia Sciorilli Borrelli in Milan and Sarah White in London

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